1.MOHD ARIF 2.BUSHRA ZAHIR KHAN 3.ARTI YADAV 4.ARMAN ALI 5.ARUNIMA SHARMA 6.DIMPLE KUMARI 7.JYOTSNA MIDDLE INCOME TRAP
WHAT’S THE INDIA STORY
Rising GDP growth % average annual GDP growth 1900 – 1950 1.0 1950 – 1980 3.5 1980 – 2002 6.0 2002 – 2006 8.0 Sources: 1900-1990: Angus Madison (1995), Monitoring the World Economy, 1990-2000:Census of India (2001), 2000-2005 Finance Ministry
Population growth is slowing % average annual growth 1901 – 1950 1.0 1951 – 1980 2.2 1981 – 1990 2.1 1991 – 2000 1.8 2001 – 2010 1.5 Sources: 1900-1990: Angus Maddison (1995), Monitoring the World Economy, 1990-2000:Census of India (2001)
Literacy is rising % 1950 17 1990 52 2000 65 2010 (proj) 80 Source: Census of India (2001)
Productivity is rising 30% to 40% of GDP growth is due to rising productivity
Middle class is exploding % Million People 1980 8 65 2000 22 220 2010 (proj) 32 368 Source: The Consuming Class, National Council of Applied Economic Research, 2002
WHAT IS A MIDDLE INCOME TRAP Countries stagnating and not growing to advanced country levels
INCOME AND CONSUMPTION TRRNDS
Figure 1. Changes in income share by economic class
Figure 2. Growth in inflation-adjusted family income
Figure 3. Inflation-adjusted median family income
Figure 5. Annual hours of work in married families, 1979 & 2000
priorities for becoming a determined marathoner
Enormous challenge of managing threesimultaneous transformations
“Managing three transformations simultaneously will be an enormous challenge. To do so, India must anticipate and adapt to the changes wrought by each of these transformations individually and collectively
THREE DIMENTIONS TO GROWTH
Society—moving from a poor society to a
cohesive affluent society
Economy—moving from a domestically oriented
to a globally competitive economy
World—moving from a small player to a responsible
“India’s long-term prospects and growth will depend on its ability to balance all three dimensions—society, economy and global citizenship—as it makes policy decisions
Overarching issues of governance
facets of governance must change to transform the Indian economy and society:
Create a smarter, more focused, agile and more credible government. Retool the civil service to meet the needs of today and tomorrow.
Focus on the long term and open the public private dialogue. Support competitive markets and prevent capture of state organs.
Inculcate a code of self-discipline and ethical behavior within the business community. Reverse the deterioration in political governance.
Implement priorities, monitor results, ensure transparency and enforce accountability.
“A refocused government is essential to facilitating dramatic transformations in the Indian economy and society. There is a need to rethink not only what the government does but also how it does it
intergenerational issues requiring an immediate start
Tackle disparities and achieve inclusive growth. Dramatically improve the quality of the environment.
Eliminate infrastructure bottlenecks—Create a competitive edge. Improve the delivery of public services—Create functioning cities for sustaining growth.
Renew the focus on education, technological development and innovation—Keys to sustaining improvements in competitiveness. Launch a revolution in energy—Ensure security and competitiveness.
Foster a prosperous South Asia and become a responsible global citizen—India, its neighborhood and the world.